Future of Ashneer Grover in BharatPe looks blink

Ashneer is the co-founder and Managing Director of a Fintech start-up BharatPe, which is a financial technology app in the Indian digital payment or transaction space. It is similar to PhonePe and Paytm and other such digital payment channels. The company had witnessed a 7X growth of its annual revenues, which earlier stood at Rs 110 crore during FY20 stood and has currently surged up to Rs 700 crore in FY21.

BharatPe, allows shop owners to make digital payments through QR codes. BharatPe also extends Bharat Swipe (POS machine) for card acceptance and small business financing. Furthermore, the company also offers merchant loans of up to Rs 7 lakhs that can be availed for a duration of 3 to 12 months. BharatPe also owns a peer-to-peer lending platform called 12% Club. BharatPe also launched the Digital Gold product in 2020. This will allow the users to transact for 24-carat gold with 99.5% purity.

The controversy came to the lime light ,when Grover's audio clip went viral on social media where he can be heard speaking in abusive language with a Kotak Mahindra Bank employee.

The Board of BharatPe has not terminated the services of any employee at this stage. Reports suggesting any termination are baseless and untrue. The Board remains committed to an independent and thorough audit process. No action has been taken or will be taken till the audit has been completed.

The decision is based on a preliminary internal investigation that has thrown up indications of financial fraud, the people said, requesting anonymity. BharatPe has engaged through its legal firm, Shardul Amarchand Mangaldas has appointed a law firm and a risk advisory consultant Alvarez and Marsal (A&M) to conduct an independent audit to bolster internal processes and systems, the results of which are expected to take two months.

The audit is looking to establish the nature and scale of these irregularities. Besides Grover, Madhuri, his wife, is also under the scanner. The board will take action based on the findings of the audit report.

At the same time, Ashneer has also appointed a New Delhi-based law firm Karanjawala & Co. and is engaging with them on how to best safeguard his position and keep his shareholding of around 9% intact in the fintech startup,

The board of BharatPe has decided to terminate the services of Ashneer Grover, the company’s co-founder and managing director, experts reported . Madhuri Jain Grover, Grover’s wife who is head of controls at BharatPe, was also part of the conversation, and she has also reportedly gone on leave. The audio clip had the couple allegedly insulting the manager for not getting a shared allotment in Nykaa's initial public offering (IPO).

BharatPe, which mostly caters to the financial services needs of small merchants and kirana stores, was founded in 2018 and is valued at $2.85 billion. It has been a leading new-age player in the digital payments sector. Sequoia’s stake in BharatPe is worth around $560 million.

In August 2020, he allegedly subjected Harshjit Sethi, the managing director at Sequoia India – one of BharatPe’s early backers – to aggressive messages and threats because of a delay in funding. Neither Sequoia nor BharatPe have publicly addressed these issues.

Ashneer Grover has played fast and loose not just with the company's governance but also its business model. While its board and investors cry foul now, they're hardly blameless. However, BharatPe chief executive Suhail Sameer also denied the developments and said Jain has not left the company.

Top allegations, which is now discussed :

# Ashneer Grover and his family seemingly had on the company's finances

# The company's PoS machines and P2P lending products skirt around regulations and share an unhealthy dependence on each other

# The company's valuation sky rocketed to $2.85 billion.

The BharatPe revenue model depends on providing its consumers with a digital payments platform and also has got a separate app for its merchant friends where the company credits them for their transactions digitally as mentioned above. It actually sails for providing credits to the merchants with cheaper interests.

On 12th October 2021, BharatPe ropes in former SBI chief Rajnish Kumar as the new chairman of its board. Rajnish will help lay down the short-term and long-term strategies of the company along with collaborating with the other board members and CXOs on primary business and regulatory initiatives.

Grover initially tweeted that the recording was fake and that “some scamster” was trying to extort $240,000 in bitcoin from him. He shared screenshots of alleged emails seeking money. The same week, the audio clip was removed from Twitter and SoundCloud. Grover then deleted his own tweet, telling ET he had done so as the original clip had been taken off.

The investors and the board have been in talks with Grover and the senior management of the company,” said one of them. “The option was to either ask him to step down or get him to go on temporary leave and then phase him out.”

“The Board of BharatPe is committed to the highest standard of corporate governance at the company and is doing an independent audit of the company’s internal processes and systems. BharatPe, through its legal firm, Shardul Amarchand, has appointed Alvarez and Marsal (A&M), a leading management consultant and risk advisory firm, to advise the board on its recommendations. The board strongly believes in protecting the interests of all stakeholders, including customers, employees and partners," the company said in a statement. It did not respond to specific queries about Jain’s departure and allegations of fraud.

Meanwhile, Ashneer Grover remained in the news with his presence on the popular business reality show Shark Tank India on TV, and his comments on the entrepreneurs pitching for funds that many found rude. While audiences like his straightforwardness, most find him unnecessarily harsh to budding entrepreneurs.

Finally, all eye on the leaders including Rajnish Kumar, former chairman of State Bank of India, is the chairman of BharatPe’s board of directors. Rahul Kishore of Coatue Management; Harshjit Sethi, a managing director at Sequoia Capital India; Kewal Kundanlal Handa, former chairman, Union Bank of India; and Meyer Malka of Ribbit Capital, are among the board members of BharatPe’s parent Resilient Innovations on how they are coming out from this crisis.